Moulded luggage industry gets set for stiff competition

Moulded luggage industry gets set for stiff competition.

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Jagannath Dubashi

January 10, 2014

ISSUE DATE: September 30, 1985

UPDATED: March 27, 2014 12:52 IST

The battle of the bags has always been a fierce one. Last year witnessed a no-holds-barred contest when Universal Luggage, makers of the Aristocrat range, offered price cuts of up to 35 per cent in a spirited effort to overtake Blow Plast Ltd, makers of the competing VIP range.

When the dust settled and both companies totted up their takings, it was clear that Universal's Jal Engineer, the founder of the moulded luggage industry in India, had lost out badly to arch-rival Dilip Piramal.

Piramal's Blow Plast came out of 1984-85 with luggage sales totalling a hefty Rs 60 crore, a 50 per cent increase over the previous year. Universal came through rather battered with Rs 33 crore, a meagre 10 per cent increase over 1983-84, and well below the targeted Rs 50 crore. Says Engineer: "It's been a bad year and a bad setback."

"We must stop thinking in terms of wars and more about quality."Jal Engineer, proprietor, Universal Luggage

The prime reason for the reclusive entrepreneur's company doing so badly is labour trouble. A prolonged strike lasting over nine months had shut down its Bombay plant since September last year. The plant contributes 40 per cent of production. A shorter shutdown crippled the working of its Satara factory for about four months.

Universal executives assert they lost Rs 17 crore of production mainly because of the strikes and that Blow Plast and the industry number three - Safari Industries - which has increased its sales from Rs 9 crore to Rs 15 crore this year, carried away the rest of the pie. Indirectly confirming this, Piramal says: "Whatever it is, we have established ourselves as the definite leaders of the industry."

But both Engineer and Piramal could face stiff competition in the coming years because of the proposed entry into the Indian market of the world's second largest manufacturer of luggage, American Tourister. The US giant has tied up with the B.D. Group of Industries - a steel group with a turnover of Rs 100 crore - to promote a company called Gujarat B.D. Luggage.

Its plant, with an investment of Rs 20 crore - equal to the investment of all the three Indian manufacturers put together - is to come up near Vadodara. Says Harmeet Singh, project coordinator and former chief executive of Blow Plast: "Superior hand luggage is not available in the country and the status connotation of the product has gone. We aim to produce high-class bags for the upper segment of the market and think they will sell even if they are priced 30 per cent higher."

The entry of American Tourister will almost certainly cause fresh ripples in a market that is expected to grow annually at about 25 per cent. Already moulded luggage accounts for 65 per cent of the market, with rexine/plywood cases a distant second at 25 per cent. In that contest the new contender for the plastic sweepstakes is definitely someone to contend with.

Says Engineer: "They are certainly going to take a major share of the market." He mentions that American Tourister had earlier offered him a collaboration - which the proud Engineer countered by making a similar return offer. Piramal - who had tied up with Samsonite briefly before this first Indo-US luggage marriage broke up - feels on the other hand that there is little to worry about in the American Tourister challenge: "We make the same bags they do."

"We have established ourselves as the definite leaders of the industry."Dilip Piramal, chairman, Blow Plast Limited

Not quite, The new bags will be vacuum formed out of a new material called ABS, which is used for bags all over the world - except in India.

Here HDPP, a much cheaper but also considerably heavier material, has been the staple diet of the injection-moulding machines. "Ours is the new technology," says Singh. "Theirs is the old. We will give India contemporary luggage."

And as a part of the war of words that is heating up before the battle begins in the market-place, he scoffs at the fact that most Indian bags have only token locks and token keys. "Not so," retorts Safari Chairman Sumati Mehta. "The newer generations of bags have exclusive safety features like combination locks and vault locks comparable to the best in the world.

The luggage landscape has been energised not just by the arrival of one of the giants, but also by the success of soft luggage-bags and totes-launched by Blow Plast in its Skybag range. Piramal claims that sales last month at some of his larger stores were almost equally divided between hard and soft luggage.

Safari is thinking of introducing a similar line, while Engineer says he is looking into it. The new company is also going to produce what Singh calls "soft bags of a superior quality. " And says Mehta: "The market for this range of luggage is the upwardly mobile professional who wants to look good when he travels."

Blow Plast now expects sales to shoot up to Rs 90 crore in 1985-86, while a chastened Universal is aiming for about half that. Says Engineer: "When a man is hospitalised you don't think of running, you have to walk first." Universal's new Oscar range is a low-priced 90 per cent plastic suitcase turned out on integrated machines-which produce almost an entire bag in one go-at its new Aurangabad plant.

Engineer has reportedly gone in for mass production, targeting a rate of one bag every 50 seconds. However the plant has teething problems and is producing at only half that rate. Safari, on the other hand, plans to nearly double its turnover this year to Rs 30 crore, and is looking for a tie-up with the Bata chain of shoe stores to sell its bags. "We don't want to downrate our product by giving discounts, " says Mehta. "We'd rather depend on strong marketing. "

Over the next few years, therefore, the bright bags will be pawns in a developing struggle for markets. Says Piramal: "The new ranges now coming out every day - I do not know my own complete range - indicate that the industry has come of age. Engineer is more circumspect: "The next few years will see steady consolidation of markets. We must stop thinking in terms of wars and more about quality." What seems likely is that the American Tourister stress on quality will in fact be one of the many elements in a new battle of the bags.

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